To find out if a self-funded health insurance plan is right for your business, it’s… more

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Here are a few simple things owners should understand to make sure they are choosing the best possible plan for their employees.

What are partially self-funded health insurance plans?

They are sometimes referred to as level-funded plans, and they have a few interesting wrinkles that make them different than standard health insurance for a small business.

Here’s a short list of differences:

They can be medically underwritten: For groups with fewer than 50 employees, you generally have the option with these plans to get lower rates based on the health of your group.

They’re often less expensive: These plans can typically cost 25 percent to 30 percent less than standard small group plans, if you have a healthier group.

They include a reserve account for medical bills: With these plans, a portion of your monthly premium goes into a reserve account, which the insurance company uses to pay for medical care if you or any of your employees or dependents has a covered medical claim. Once your reserve account is empty, the insurance company takes over and pays the remaining covered claims.

You keep unused funds from your reserve account: If you have money left over in your reserve account at the end of the year, you generally get to keep it. You can save the money, you can give it back to employees or you can use it to pay for health insurance the following year.

Of course, there’s no guarantee that you’ll save money with a partially self-funded plan, but there’s the potential to do so. Partially self-funded plans are generally better suited to employers with employees who don’t see the doctor very often.

Here’s a breakdown of the differences between standard and partially self-funded small business health insurance plans:

Benefit: Qualifies as major medical insurance and protects you from any possible tax penalties for not having or providing health insurance
Standard small group insurance: Yes
Partially self-funded insurance: Yes

Benefit: You can get a refund on unused funds in your reserve account at the end of the year
Standard small group insurance: NA
Partially self-funded insurance: Yes

To find out if a self-funded health insurance plan is right for your business, it’s important to analyze fees for administration, broker, network access and actual claims data. This knowledge allows you to accurately evaluate your costs, and identify the areas you can potentially save more money.

An executive with 15+ years of experience in the industry, Lopez leads eHealth's small business sales team. He also serves as a company spokesperson and expert in educating business owners and employees about the Affordable Care Act and how to navigate health insurance options in the evolving healthcare landscape. Lopez is a former United States Marine, and a proud husband and father of three.